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Debate House Prices
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Disconnect widens between base rates and LIBOR
Comments
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It's been a good day for every borrower. When people's nice cheap fixed rate ends they will move onto the SVR and repayments will be even cheaper.0
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Looks to me like the government is determined to run a loss-making public banking sector, funded with taxpayer cash or freshly printed money, with the goal of keeping debt repayments low.
But new lending has been vastly reduced with products being withdrawn and repriced meaning that new FTBs are going to find it harder than ever to get a mortgage.
This is robbing Peter to pay Paul. The cost of buying a mortgage repayment cut for existing debtors is to further shut out new buyers and rip off savers and the taxpayer.
No, the government is determined to keep people in jobs and money flowing through the system.0 -
No, the government is determined to keep people in jobs and money flowing through the system.
Deals got a lot worse for new mortgage takers after the latest round of cuts. Trackers withdrawn and priced sharply up, higher LTVs required etc.
All the government is doing is robbing Peter to pay Paul. They've introduced debt relief for some existing mortgage holders but the costs will be shifted to new mortgage takers and savers. Especially with the FTB situation, this risks prolonging the crash as with less new buyers entering the market, shifting a house is just going to be even more difficult.
The government is also starting to grossly interfere with the banks' capacity to earn money. Given that they just committed tens, potentially hundreds, of billions to bailing them out a month back this is the worst thing that they could do. It means stretching out the banking crisis and probably having to spend even more money subsidising said banks.
I strongly suspect that some sort of snap general election is in the offing. Brown seems to have got a bounce from not managing to lose the safe Labour set in his neighbouring constituency and the govt has been seen to successfully put pressure on their pet banks to make paying back mortgages cheaper. Never mind the costs.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
I strongly suspect that some sort of snap general election is in the offing. Brown seems to have got a bounce from not managing to lose the safe Labour set in his neighbouring constituency and the govt has been seen to successfully put pressure on their pet banks to make paying back mortgages cheaper. Never mind the costs.
Interesting to hear someone else suggesting this as it was running through my mind after the big cut and the arm-twisting to pass it on - saving the average borrower £150 per month will put a buzz back in to xmas shopping and possibly even make people start think about house buying again as mortgages become seriously cheap. Another couple of 0.5% cuts in jan and march to bounce the spring housing market and rush to the county at the start of May before reality catches up, spending and the economy tank again and the full impact on unemployment really starts to hit demand throughout the economy.
The BBC are being kept well in line (via the Ross/Brand affair) and the business team already being in GB's pocket and are happily back on message presenting the Govt's announcements as the news.I think....0 -
Sorry, but how is the fact that the government has coerced the banks it supports into cutting their rates to match base rate cuts 'not a good day' for me?
I guess you could say it is a pretty bad day for everyone, and by extension me, because what they have done means that the banks are taking a loss (the rates they borrow at haven't come down by 1.5%) and the results will be no doubt subsidised by taxpayers chucking more money at keeping the banks afloat in the longer run because of it - it that what you meant? Oh yeah, and savers will be reamed even more and since I have savings, that's also bad for me on the face of things. Lucky the price of what they are going to eventually buy is coming down by around 13% a year though so I'm not too devastated at the loss of a percent and a half of interest.
In the meantime, if the general public get some extra relief out of the situation (which is being funded by taxpayers) it's better than nothing but the price will be high in the longer term.
It must anoy you that sterling has strengthened against both the Euro and the dollar, with all your foreign reserves. Should be OK for inflation though.'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
Interesting to hear someone else suggesting this as it was running through my mind after the big cut and the arm-twisting to pass it on - saving the average borrower £150 per month will put a buzz back in to xmas shopping and possibly even make people start think about house buying again as mortgages become seriously cheap. Another couple of 0.5% cuts in jan and march to bounce the spring housing market and rush to the county at the start of May before reality catches up, spending and the economy tank again and the full impact on unemployment really starts to hit demand throughout the economy.
The BBC are being kept well in line (via the Ross/Brand affair) and the business team already being in GB's pocket and are happily back on message presenting the Govt's announcements as the news.
The government with copious help from the BBC have managed to dodge most of the responsibility for their rubbish policies and blamed the whole thing on the US and global markets. Short sellers/hedge funds are the bad guys du jour and conniving bankers who want to make debtors pay market rates are secondary villains. Luckily Brown and Darling have laid down the law and those banks will now cut - how great of them to fight for the common man, eh?
No-one in the mainstream media is pointing out how since the banks which have cut by 1.5% are mostly the same ones which are now being supported with taxpayer backing, they'll be losing even more money by matching the base rate cuts and this will have to be made up by a combination of hammering their savers, soaking the taxpayer for more cash and making the deals worse for new mortgage takers.
The situation isn't maintainable (watch the fur start to fly soon as UK Treasury bonds go unsold) so the govt is going to have to get a move on if they are going to take their window of opportunity. I wonder has Gordo learned his lesson from his dithering last year after he was crowned PM by the Labour Party and didn't take the chance to go to the country?--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
It must anoy you that sterling has strengthened against both the Euro and the dollar, with all your foreign reserves. Should be OK for inflation though.
FYI, I'm up by a fair few k on the month (in sterling terms) if I change now (much much more over the last 18 months). But thanks for the concern I know which way sterling is going so I'll be drip feeding the conversion to sterling.
Given the rubbish UK interest rates now, there's no hurry to get it into pounds, the only real imperative would be the UK banking guarantee being pretty decent compared to no guarantee on my offshore funds but the risk of banking collapse has abated recently.--
Every pound less borrowed (to buy a house) is more than two pounds less to repay and more than three pounds less to earn, over the course of a typical mortgage.0 -
FYI, I'm up by a fair few k on the month (in sterling terms) if I change now (much much more over the last 18 months). But thanks for the concern I know which way sterling is going so I'll be drip feeding the conversion to sterling.
Given the rubbish UK interest rates now, there's no hurry to get it into pounds, the only real imperative would be the UK banking guarantee being pretty decent compared to no guarantee on my offshore funds but the risk of banking collapse has abated recently.
Must have made all your profits before they dropped interest rates by 1.5%.'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0 -
FYI, I'm up by a fair few k on the month (in sterling terms) if I change now (much much more over the last 18 months). But thanks for the concern I know which way sterling is going so I'll be drip feeding the conversion to sterling.
Given the rubbish UK interest rates now, there's no hurry to get it into pounds, the only real imperative would be the UK banking guarantee being pretty decent compared to no guarantee on my offshore funds but the risk of banking collapse has abated recently.
Just a question, did you say that sterling would weaken if we drop interest rates?'Just think for a moment what a prospect that is. A single market without barriers visible or invisible giving you direct and unhindered access to the purchasing power of over 300 million of the worlds wealthiest and most prosperous people' Margaret Thatcher0
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